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Banks are taking greater control of the personal financial management market as the third-party vendors that defined the space increasingly find they must work with banks to survive.
January 3 -
Wells Fargo & Co. aims to help consumers navigate their finances more easily with its My Money Map personal financial management system.
December 17 -
PNC now allows joint account holders to get a more detailed view of each other's spending in its Virtual Wallet account, an online product that borrows themes from PFM systems.
December 16
"Show me the money" is not as simple a request as it once was.
As banks add personal financial management tools to their websites, the new data can garble the feeds they provide to third-party PFM companies, giving consumers an inaccurate view of their overall finances.
For example, after PNC Financial Services Group Inc. expanded its Virtual Wallet PFM account to include credit card data, some tools interpreted at least one customer's card balance as cash, not debt. Many PFM providers calculate users' net worth to show whether consumers can afford to pay their card bills each month; misrepresenting even one account can wildly throw off the accuracy of that figure.
"Banks are not here to make it hard for us, but it is not their job to make it easy, either," said Steve Schultz, the chief operating officer for Pageonce Inc., a mobile PFM provider.
Hence, "sometimes there are problems" with data, "which is why we have a team of people watching out for them," Schultz said. "When we have a problem, we try to fix it."
Such mix-ups may become more common, because many banks only recently found the funding to implement long-anticipated online banking updates, said Ron Shevlin, a senior analyst at Aite Group. Banks increased tech spending by 15% in 2010 and will likely do so again this year, Shevlin said. As they add tools that allow for categorization of spending, vendors' information processing problems will grow as they try to make sense of bank data.
"What presents challenges for the vendor is when banks do site redesigns, then [the vendors] have to remap to the bank," Shevlin said.
PNC's Virtual Wallet was originally a collection of three checking and savings accounts. Regardless of how customers spread their money, all of those accounts were cash, not debt. That changed in August, when PNC allowed its customers to add credit card spending data.
Wells Fargo & Co. and Bank of America Corp. have also been updating their homegrown PFM offerings. Independent providers have been signing new deals to put their software on bank sites.
Most third-party vendors have numerous relationships with banks and other financial institutions, and there is no standardized way that they get consumer information. Vendors can get data by sending out automated requests, using customer login credentials. They can use a bank application programming interface that identifies them as a vendor seeking information. Increasingly, they also rely on direct feeds of information, and "Web crawlers," or pieces of code that scour the Internet for changes to websites. Sometimes they rely on all of the above.
1st Advantage Federal Credit Union said importing accurate data is vital to its strategy of using PFM to generate revenue. This month it began testing a system from the PFM provider Geezeo Inc. that lets it build marketing campaigns almost instantly from spending data. 1st Advantage said that the more recent and accurate customer information is, the more targeted those messages can be.
"The more channels I can reach the members with a targeted message, the better," said Jim Craig, the vice president of marketing at 1st Advantage.
The Newport News, Va., credit union has 60,000 members and assets of $550 million. It will begin offering the PFM system to its customers by the end of the first quarter.
Intuit Inc.'s Mint was one of the PFM providers that miscategorized credit card data pulled from PNC's Virtual Wallet. Tobin Lee, an Intuit spokesman, said its aggregation uses real-time, batch and hybrid approaches, including OFX and direct feeds, as well as screen scraping. "Intuit is a leader in pulling this off successfully," Lee said.
PNC declined to comment for this story. An executive from Intuit's Mint business did not respond by deadline.
Many PFM vendors have developed sophisticated technology and have dedicated teams of specialists to stay on top of changes to online banking services.
For example, Pageonce, of Palo Alto, Calif., has a proprietary system that "learns on the fly," Schultz said. This system mimics what larger firms such as Yodlee Inc. do for account aggregation, supporting a wide variety of data-locating technology. (Pageonce supports the information of about 10,000 financial institutions and billers.)
In addition to using passwords and usernames to access data, Pageonce has also created software that reads the standardized OFX feeds that some banks use.
Schultz said Pageonce also relies on metadata tags, which allow its data engines to locate consumer information regardless of where it is placed or where it moves. Still other financial institutions use APIs to identify Pageonce and give it access to their data. Lastly, it combines gathering of OFX information with proprietary Web crawling engines that constantly look for changes in the websites it services. Pageonce has a team of people devoted to watching for the changes the crawlers report.
"This data has to be right and nearly 100% accurate," or it is not valuable to users, Schultz said.
Still, analysts said the emphasis for PFM is now on direct feeds, because they are more accurate and meet consumer demands for real-time data.
"Consumers have come to rely and act on this information, and when it is not accurate, this is a big problem," said Emmett Higdon, a senior analyst at Forrester Research Inc. "This is one of the reasons why Yodlee and CashEdge and Intuit have all moved away from screen scraping and want a direct connection and data feeds."
Yodlee said it has moved away from conventional screen-scraping. While it has relationships with 12,000 financial institutions and billers, its "data is primarily coming through data feeds," said Eric Connors, vice president of product management for the Redwood City, Calif., company.
Eighty percent of Yodlee's data comes from direct feeds from the top 10 financial services companies, with which most consumers have relationships. For the rest, the problem remains the same as for smaller entities like Pageonce.
Geezeo, of Tolland, Conn., provides white-label PFM products and services to the banks.
When banks host Geezeo's software, they provide their transaction data directly, no screen-scraping required. For outside accounts, Geezeo uses CashEdge Inc.'s aggregation service.
Peter Glyman, Geezeo's president and co-founder, said staying on top of the changes to online banking sites is how third party vendors provide value. "This is not easy; if it was, more would do it," he said.
Real-time PFM data is something bank core platform providers are now offering as well. Jack Henry & Associates Inc. of Monett, Mo., has created a real-time PFM service, called Cash Flow, which taps directly into the four core processing systems it sells to banks. It uses CashEdge on the back end for "held away," or aggregated, accounts, which are updated either nightly, or at the account holder's request.
"The majority of PFM tools are not tied to the core. They are stand-alone tools that have to be integrated," said Pete Hopkins, general manager of online services for Jack Henry, adding that its PFM customers get real-time data from the core. "People want their information now and they want it up to date."
